How is GST paid?
GST is paid from the electronic cash ledger and the electronic credit ledger when GSTR-3B is filed. Company Suggestion creates the challan, confirms it in the cash ledger, and debits that ledger with the return. A monthly filer does this by the 20th of the next month.
Where does the tax sit before it is paid?
Two ledgers sit on the GSTIN. The cash ledger holds money paid in by challan. The credit ledger holds input tax credit that GSTR-2B and the Act allow. Neither ledger pays the tax until the return uses it.
A payment status on the portal is the cash-ledger entry after the bank confirms the challan. It is not a separate certificate.
How does the challan work?
The challan is PMT-06. It is created on the GST portal for the amount of CGST, SGST or UTGST, IGST, cess, interest, and fee that the cash ledger needs. Net banking, a card, or NEFT or RTGS can pay it. Over-the-counter payment is limited to the amount the rules allow.
The bank’s confirmation posts the amount to the cash ledger. A challan that is generated and not paid does not create a balance. The CIN on a confirmed challan is the reference for that deposit.
Which ledger pays which tax?
Credit is used before cash, and only in the order section 49 allows.
- IGST credit pays IGST first, then CGST or SGST in either order.
- CGST credit pays CGST, then IGST. It does not pay SGST.
- SGST credit pays SGST, then IGST. It does not pay CGST.
- Interest and late fee come only from the cash ledger.
Cash for interest. Credit can pay output tax. It cannot pay interest or the late fee.
When is the payment due?
The tax is due with the return. A monthly GSTR-3B is the 20th of the next month. Under QRMP the quarterly date is the 22nd or the 24th, and the first two months of the quarter are paid by a challan. Those dates are on the GST return page.
A composition dealer does not pay through GSTR-3B. The quarterly statement is CMP-08, by the 18th of the month after the quarter.
Frequently asked questions
Four questions cover the challan, interest, the credit set-off, and the ledger status.
Is the challan the same as the return?
No. PMT-06 only adds money to the electronic cash ledger. The tax is paid when that ledger, and the credit ledger, are debited in GSTR-3B.
Can input tax credit pay interest or a late fee?
No. Interest under section 50 and the late fee under section 47 are paid from the cash ledger.
Can CGST credit pay SGST?
No. CGST credit pays CGST and then IGST. SGST credit pays SGST and then IGST. One state’s credit does not pay the other.
Where is the payment status?
On the GST portal, in the electronic cash ledger, after the bank confirms the challan. A pending NEFT or RTGS challan is not a payment until that confirmation.
Sources
Payment and set-off are in sections 49 and 50 of the CGST Act. The monthly return date is the one on the GST return page.